The big Canadian banks are fresh off an astounding year, but what’s even more impressive about the mega-cap financial titans is that they’ve all held quite steady so far this year despite the turbulence upsetting the broader markets. We may be just over a month into 2026, but we’ve already run into turbulence. Indeed, we may very well be entering a choppy climate for stocks, where investors are starting to look to steadier, more affordable places to park cash while scoring a decent-enough return.
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The banks have been resilient in the face of market chop
Before you rotate into fixed income, GICs, or steady utility stocks, though, I do think the banks are an enticing place to look, even though they tend to be the first to fall at the first signs of an economic downturn. While the Canadian economy isn’t exactly scorching hot, I do think that recession fears are a tad overblown. Add the AI productivity boom to the equation, along with hopes of lower rates, and perhaps the Canadian banks might have more room to the upside. Personally, I like the year-ahead outlook for the Canadian banks.
Of course, some investors may be a bit alarmed that the momentum has slowed in the past month. Could this “digestion” of last year’s gains be followed by another strong surge? Or could a correction be in the cards as investors go into earnings season with higher hopes now that valuation metrics are close to the highest they’ve been in a number of years?
While expectations are higher, I still think it’s a mistake to underestimate the big banks. They’ve continued to pounce past expectations, and with tailwinds kicking into high gear, I think the financial sector could be one of the stronger sectors of the year as the TSX Index looks to outpace the S&P again.
An easy way to bet on all six Canadian bank stocks
So, how can Canadian investors buy all six of the big Canadian banks without having to run up the commissions? For those who are interested in maintaining an equal weighting, the big bank ETFs, such as the BMO Equal Weight Banks Index ETF (TSX: ZEB), could be a fantastic way to go.
The management expense ratio (MER) sits at a relatively hefty 0.28%, providing a slightly pricier passive way to bet on the broad basket of Canadian bank stocks. That said, I do think MER cuts could be on the horizon, especially as the bank behind the bank ETF looks to stay competitive with new comparable ETFs that landed more recently.
With a nice 3% dividend yield and 42% in past-year momentum, I think the HBNK is a one-stop shop. As much as I like the banks in 2026, I’d not look to buy a full position all in one go.
Perhaps buying a quarter position here and the rest on a dip could be the best way to tame a rise in volatility levels. If there is an AI bubble burst, perhaps no sector is safe from the shockwaves. So, with that, don’t rush your buying. It’s far more important to play the long game than to look for a quick gain from trading!
